Midland States Bancorp, Inc. Announces 2021 First Quarter Results

Effingham, Illinois, UNITED STATES


Summary

  • Net income of $18.5 million, or $0.81 diluted earnings per share
  • Efficiency ratio improved to 56.88% from 58.55% in Q4 2020
  • Return on average shareholders’ equity of 12.04%
  • Return on average tangible common equity of 17.28%
  • Tier 1 leverage ratio increased 29 bps to 7.79%
  • Book value and tangible book value per share increased 2.2% and 3.5%, respectively

EFFINGHAM, Ill., April 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021. This compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which was negatively impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on mortgage servicing rights (“MSRs”) held-for-sale, and $0.2 million in integration and acquisition expenses, and to net income of $1.5 million, or $0.06 diluted earnings per share, for the first quarter of 2020, which was negatively impacted by an $8.5 million impairment on commercial MSRs and $0.9 million in integration and acquisition expenses.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter results reflect a significant increase in our level of profitability resulting from the actions we took last year to increase efficiencies and optimize our business model. Despite operating in a low growth, low interest rate environment, we are seeing substantial improvement in our performance metrics including our efficiency ratio, return on average assets, and return on average tangible equity, as well as strong increases in our capital ratios and book value.

“We continued to execute on our strategy to increase our recurring fee income with the announcement of our acquisition of ATG Trust Company, which we expect to close during the second quarter of 2021. The addition of ATG Trust will further increase our assets under administration and provide additional expertise in specialized areas that will improve our ability to attract new clients to our wealth management business.

“During the first quarter, we saw an elevated level of loan payoffs and paydowns, which impacted our total loan balances. However, we are seeing encouraging signs of improving economic conditions in our markets and a growing loan pipeline. As a result, we believe that we will see stronger loan production and loan growth as we move through the year. The stronger loan growth and redeployment of our excess liquidity into higher yielding assets should enable us to realize additional operating leverage and generate further improvement in our level of profitability going forward,” said Mr. Ludwig.

Adjusted Earnings

Financial results for the fourth quarter of 2020 were impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.5 million, or $0.54 per share, for the fourth quarter of 2020.

Financial results for the first quarter of 2020 were impacted by $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding these amounts and certain income and other expenses, adjusted earnings were $2.8 million, or $0.11 diluted earnings per share, for the first quarter of 2020.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Net Interest Margin

Net interest margin for the first quarter of 2021 was 3.45%, compared to 3.47% for the fourth quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 8 and 10 basis points to net interest margin in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin was unchanged from the fourth quarter of 2020, as a favorable shift in the mix of earning assets and a reduction in the average cost of funds was offset by a decline in the average yield on loans and securities.

Relative to the first quarter of 2020, net interest margin decreased from 3.48%. Accretion income on purchased loan portfolios contributed 16 basis points to net interest margin in the first quarter of 2020. Excluding the impact of accretion income, net interest margin increased 5 basis points compared to the first quarter of 2020, primarily due to a reduction in the average cost of deposits and the accelerated recognition of Paycheck Protection Program (“PPP”) loan income upon forgiveness.

Net Interest Income

Net interest income for the first quarter of 2021 was $51.9 million, a decrease of 3.1% from $53.5 million for the fourth quarter of 2020. Excluding accretion income, net interest income decreased $1.2 million from the prior quarter, which was primarily due to lower PPP loan income. Accretion income associated with purchased loan portfolios totaled $1.2 million for the first quarter of 2021, compared with $1.6 million for the fourth quarter of 2020. PPP loan income totaled $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021, compared to $3.7 million, including loan origination fees of $3.1 million, in the fourth quarter of 2020.

Relative to the first quarter of 2020, net interest income increased $5.2 million, or 11.2%. Accretion income for the first quarter of 2020 was $2.2 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in the cost of funds.

Noninterest Income

Noninterest income for the first quarter of 2021 was $14.8 million, an increase of 3.3% from $14.3 million for the fourth quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $1.3 million and $2.3 million in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impairments, noninterest income decreased 3.5% primarily due to lower levels of residential mortgage banking revenue and service charges on deposit accounts.

Relative to the first quarter of 2020, noninterest income increased 72.3% from $8.6 million. The increase was primarily attributable to a lower level of impairment on commercial MSRs.

Wealth management revenue for the first quarter of 2021 was $5.9 million, an increase of 1.1% from the fourth quarter of 2020. Compared to the first quarter of 2020, wealth management revenue increased 4.5%.

Noninterest Expense

Noninterest expense for the first quarter of 2021 was $39.1 million, which included $0.2 million in integration and acquisition expenses, compared with $47.0 million in the fourth quarter of 2020, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, and integration and acquisition expenses, noninterest expense decreased by $2.5 million, primarily due to lower salaries and employee benefits expense resulting from the Company’s branch network and facilities optimization initiative implemented during the fourth quarter of 2020, as well as a one-time vacation rollover accrual recorded in the prior quarter.

Relative to the first quarter of 2020, noninterest expense decreased 6.2% from $41.7 million, which included $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding the integration and acquisition expenses, the losses on residential MSRs held-for-sale and the loss on the repurchase of subordinated debt, noninterest expense declined $1.1 million, primarily due to lower salaries and employee benefits expense and lower occupancy and equipment expense resulting from the Company’s branch network and facilities optimization initiative.

Loan Portfolio

Total loans outstanding were $4.91 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020 and $4.38 billion at March 31, 2020. The decrease in total loans from December 31, 2020 was primarily attributable to elevated payoffs and paydowns across most of the Company’s major portfolios, as well as lower end-of-period balances on commercial FHA warehouse lines of credit, which was partially offset by an increase in PPP loans following the origination of $79.3 million of loans in the second round of the program.

Equipment finance balances decreased $2.9 million from December 31, 2020 to $858.6 million at March 31, 2021, which are booked within the commercial loans and leases portfolio.

The increase in total loans from March 31, 2020 was primarily attributable to the growth in equipment finance balances, consumer loans, and PPP loans.

Deposits

Total deposits were $5.34 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020, and $4.65 billion at March 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to strong inflows of retail deposits resulting from federal government stimulus payments and PPP-related commercial deposits.

Asset Quality

Nonperforming loans totaled $52.8 million, or 1.08% of total loans, at March 31, 2021, compared with $54.1 million, or 1.06% of total loans, at December 31, 2020. The decrease in nonperforming loans was primarily attributable to the resolution of long-term problem loans. At March 31, 2020, nonperforming loans totaled $58.2 million, or 1.33% of total loans.

Net charge-offs for the first quarter of 2021 were $1.7 million, or 0.14% of average loans on an annualized basis.

The Company recorded a provision for credit losses of $3.6 million for the first quarter of 2021, which was primarily related to additions to specific reserves.

The Company’s allowance for credit losses on loans was 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021, compared with 1.18% of total loans and 111.8% of nonperforming loans at December 31, 2020. Approximately 90.3% of the allowance for credit losses on loans at March 31, 2021 was allocated to general reserves.

Capital

At March 31, 2021, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

 
Bank Level
Ratios as of
March 31, 2021
Consolidated
Ratios as of
March 31, 2021

Minimum
Regulatory
Requirements (2)
Total capital to risk-weighted assets12.18%13.73%10.50%
Tier 1 capital to risk-weighted assets11.15%9.62%8.50%
Tier 1 leverage ratio9.03%7.79%4.00%
Common equity Tier 1 capital11.15%8.39%7.00%
Tangible common equity to tangible assets (1)NA6.67%NA

(1)  A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2)  Includes the capital conservation buffer of 2.5%.

Stock Repurchase Program

During the first quarter of 2021, the Company repurchased 65,840 shares of its common stock at a weighted average price of $18.35 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of March 31, 2021, the Company had $5.2 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, April 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 9390877. A recorded replay can be accessed through April 30, 2021, by dialing (855) 859-2056; conference ID: 9390877.

A slide presentation relating to the first quarter 2021 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of March 31, 2021, the Company had total assets of approximately $6.88 billion, and its Wealth Management Group had assets under administration of approximately $3.56 billion. Midland provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

                     
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
                     
  For the Quarter Ended 
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands, except per share data) 2021 2020 2020 2020 2020
Earnings Summary                    
Net interest income $51,868  $53,516  $49,980  $48,989  $46,651 
Provision for credit losses  3,565   10,058   11,728   10,997   11,578 
Noninterest income  14,816   14,336   18,919   19,396   8,598 
Noninterest expense  39,079   47,048   53,901   41,395   41,666 
Income before income taxes  24,040   10,746   3,270   15,993   2,005 
Income taxes  5,502   2,413   3,184   3,424   456 
Net income $18,538  $8,333  $86  $12,569  $1,549 
                     
Diluted earnings per common share $0.81  $0.36  $-  $0.53  $0.06 
Weighted average shares outstanding - diluted  22,578,553   22,656,343   22,937,837   23,339,964   24,538,002 
Return on average assets  1.11%  0.49%  0.01%  0.77%  0.10%
Return on average shareholders' equity  12.04%  5.32%  0.05%  8.00%  0.96%
Return on average tangible common equity (1)  17.28%  7.68%  0.08%  11.84%  1.39%
Net interest margin  3.45%  3.47%  3.33%  3.32%  3.48%
Efficiency ratio (1)  56.88%  58.55%  57.74%  59.42%  62.21%
                     
Adjusted Earnings Performance Summary (1)                    
Adjusted earnings $18,662  $12,471  $12,023  $12,884  $2,806 
Adjusted diluted earnings per common share $0.82  $0.54  $0.52  $0.55  $0.11 
Adjusted return on average assets  1.12%  0.73%  0.72%  0.78%  0.19%
Adjusted return on average shareholders' equity  12.12%  7.97%  7.56%  8.20%  1.73%
Adjusted return on average tangible common equity  17.39%  11.50%  11.04%  12.14%  2.53%
Adjusted pre-tax, pre-provision earnings $29,051  $28,855  $28,751  $27,531  $23,785 
Adjusted pre-tax, pre-provision return on average assets  1.75%  1.69%  1.72%  1.68%  1.58%
                     
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.
                     


                
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
  For the Quarter Ended
  March 31, December 31,  September 30,  June 30, March 31,
(in thousands, except per share data) 2021 2020 2020 2020 2020
Net interest income:               
Interest income $60,503  $62,712  $60,314  $60,548  $61,314 
Interest expense  8,635   9,196   10,334   11,559   14,663 
Net interest income  51,868   53,516   49,980   48,989   46,651 
Provision for credit losses:               
Provision for credit losses on loans  3,950   10,000   10,970   11,610   10,569 
Provision for credit losses on unfunded commitments  (535)  -   577   (665)  934 
Provision for other credit losses  150   58   181   52   75 
Total provision for credit losses  3,565   10,058   11,728   10,997   11,578 
Net interest income after provision for credit losses  48,303   43,458   38,252   37,992   35,073 
Noninterest income:               
Wealth management revenue  5,931   5,868   5,559   5,698   5,677 
Commercial FHA revenue  292   400   926   3,414   1,267 
Residential mortgage banking revenue  1,574   2,285   3,049   2,723   1,755 
Service charges on deposit accounts  1,826   2,149   2,092   1,706   2,656 
Interchange revenue  3,375   3,137   3,283   3,013   2,833 
Gain on sales of investment securities, net  -   -   1,721   -   - 
Impairment on commercial mortgage servicing rights  (1,275)  (2,344)  (1,418)  (107)  (8,468)
Company-owned life insurance  860   893   897   892   900 
Other income  2,233   1,948   2,810   2,057   1,978 
Total noninterest income  14,816   14,336   18,919   19,396   8,598 
Noninterest expense:               
Salaries and employee benefits  20,528   22,636   21,118   20,740   21,063 
Occupancy and equipment  3,940   3,531   4,866   4,286   4,869 
Data processing  5,993   5,987   5,721   5,458   5,477 
Professional  2,185   1,912   1,861   1,606   1,855 
Amortization of intangible assets  1,515   1,556   1,557   1,629   1,762 
Loss on mortgage servicing rights held for sale  -   617   188   391   496 
Impairment related to facilities optimization  -   (10)  12,651   60   146 
FHLB advances prepayment fees  8   4,872   -   -   - 
Other expense  4,910   5,947   5,939   7,225   5,998 
Total noninterest expense  39,079   47,048   53,901   41,395   41,666 
Income before income taxes  24,040   10,746   3,270   15,993   2,005 
Income taxes  5,502   2,413   3,184   3,424   456 
Net income $18,538  $8,333  $86  $12,569  $1,549 
                     
Basic earnings per common share $0.81  $0.36  $0.00  $0.53  $0.06 
Diluted earnings per common share $0.81  $0.36  $0.00  $0.53  $0.06 
                


                
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                
  As of
  March 31, December 31,  September 30,  June 30, March 31,
(in thousands) 2021 2020 2020 2020 2020
Assets               
Cash and cash equivalents $631,219  $341,640  $461,196  $519,868  $449,396 
Investment securities  690,390   686,135   618,974   639,693   661,894 
Loans  4,910,806   5,103,331   4,941,466   4,839,423   4,376,204 
Allowance for credit losses on loans  (62,687)  (60,443)  (52,771)  (47,093)  (38,545)
Total loans, net  4,848,119   5,042,888   4,888,695   4,792,330   4,337,659 
Loans held for sale  55,174   138,090   62,500   32,403   113,852 
Premises and equipment, net  73,255   74,124   74,967   89,046   90,118 
Other real estate owned  20,304   20,247   15,961   12,728   7,892 
Loan servicing rights, at lower of cost or fair value  36,876   39,276   42,465   44,239   44,566 
Goodwill  161,904   161,904   161,904   172,796   172,796 
Other intangible assets, net  26,867   28,382   29,938   31,495   33,124 
Cash surrender value of life insurance policies  146,864   146,004   145,112   144,215   143,323 
Other assets  193,814   189,850   198,333   165,685   153,610 
Total assets $6,884,786  $6,868,540  $6,700,045  $6,644,498  $6,208,230 
                
Liabilities and Shareholders' Equity               
Noninterest-bearing deposits $1,522,433  $1,469,579  $1,355,188  $1,273,267  $1,052,726 
Interest-bearing deposits  3,818,080   3,631,437   3,673,548   3,669,840   3,597,914 
Total deposits  5,340,513   5,101,016   5,028,736   4,943,107   4,650,640 
Short-term borrowings  71,728   68,957   58,625   77,136   43,578 
FHLB advances and other borrowings  529,171   779,171   693,640   693,865   593,089 
Subordinated debt  169,888   169,795   169,702   169,610   169,505 
Trust preferred debentures  48,954   48,814   48,682   48,551   48,420 
Other liabilities  89,065   79,396   78,780   78,640   71,838 
Total liabilities  6,249,319   6,247,149   6,078,165   6,010,909   5,577,070 
Total shareholders’ equity  635,467   621,391   621,880   633,589   631,160 
Total liabilities and shareholders’ equity $6,884,786  $6,868,540  $6,700,045  $6,644,498  $6,208,230 
                     


                     
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  As of
  March 31,
 December 31, 
 September 30, 
 June 30, March 31,
(in thousands) 2021
 2020
 2020
 2020 2020
Loan Portfolio                    
Commercial loans and leases $1,977,440  $2,095,639  $1,938,691  $1,856,435  $1,439,145 
Commercial real estate  1,494,031   1,525,973   1,496,758   1,495,183   1,507,280 
Construction and land development  191,870   172,737   177,894   207,593   208,361 
Residential real estate  398,501   442,880   470,829   509,453   548,014 
Consumer  848,964   866,102   857,294   770,759   673,404 
Total loans $4,910,806  $5,103,331  $4,941,466  $4,839,423  $4,376,204 
                     
Deposit Portfolio                    
Noninterest-bearing demand $1,522,433  $1,469,579  $1,355,188  $1,273,267  $1,052,726 
Interest-bearing:                    
Checking  1,601,449   1,568,888   1,581,216   1,484,728   1,425,022 
Money market  819,455   785,871   826,454   877,675   849,642 
Savings  653,256   597,966   580,748   594,685   534,457 
Time  718,788   655,620   661,872   689,841   765,870 
Brokered time  25,132   23,092   23,258   22,911   22,923 
Total deposits $5,340,513  $5,101,016  $5,028,736  $4,943,107  $4,650,640 


                     
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  For the Quarter Ended 
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands) 2021 2020 2020 2020 2020
Average Balance Sheets                    
Cash and cash equivalents $350,061  $415,686  $491,728  $489,941  $337,851 
Investment securities  680,202   672,937   628,705   650,356   662,450 
Loans  4,992,802   4,998,912   4,803,940   4,696,288   4,384,206 
Loans held for sale  65,365   45,196   44,880   99,169   19,844 
Nonmarketable equity securities  55,935   51,906   50,765   50,661   45,124 
Total interest-earning assets  6,144,365   6,184,637   6,020,018   5,986,415   5,449,475 
Non-earning assets  602,017   602,716   625,522   619,411   624,594 
Total assets $6,746,382  $6,787,353  $6,645,540  $6,605,826  $6,074,069 
                     
Interest-bearing deposits $3,757,108  $3,680,645  $3,656,833  $3,651,406  $3,549,515 
Short-term borrowings  75,544   62,432   64,010   59,103   55,616 
FHLB advances and other borrowings  617,504   682,981   693,721   692,470   532,733 
Subordinated debt  169,844   169,751   169,657   169,560   170,026 
Trust preferred debentures  48,887   48,751   48,618   48,487   48,357 
Total interest-bearing liabilities  4,668,887   4,644,560   4,632,839   4,621,026   4,356,247 
Noninterest-bearing deposits  1,370,604   1,446,359   1,303,963   1,280,983   986,178 
Other noninterest-bearing liabilities  82,230   73,840   75,859   71,853   78,943 
Shareholders' equity  624,661   622,594   632,879   631,964   652,701 
Total liabilities and shareholders' equity $6,746,382  $6,787,353  $6,645,540  $6,605,826  $6,074,069 
                     
Yields                    
Earning Assets                    
Cash and cash equivalents  0.11%  0.12%  0.10%  0.14%  1.26%
Investment securities  2.51%  2.65%  2.86%  3.05%  3.23%
Loans  4.50%  4.58%  4.57%  4.64%  5.01%
Loans held for sale  2.74%  3.14%  2.92%  4.07%  3.87%
Nonmarketable equity securities  4.93%  5.22%  5.26%  5.40%  5.39%
Total interest-earning assets  4.02%  4.06%  4.01%  4.10%  4.56%
                     
Interest-Bearing Liabilities                    
Interest-bearing deposits  0.34%  0.36%  0.46%  0.61%  0.95%
Short-term borrowings  0.13%  0.14%  0.17%  0.19%  0.73%
FHLB advances and other borrowings 1.69%  1.71%  1.85%  1.69%  2.24%
Subordinated debt  5.57%  5.60%  5.58%  5.85%  5.90%
Trust preferred debentures  4.08%  4.03%  4.16%  4.86%  6.02%
Total interest-bearing liabilities  0.75%  0.79%  0.89%  1.01%  1.35%
                     
Cost of Deposits  0.25%  0.26%  0.34%  0.45%  0.74%
                     
Net Interest Margin  3.45%  3.47%  3.33%  3.32%  3.48%
                     


                     
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
  As of and for the Quarter Ended 
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands, except per share data) 2021 2020 2020 2020 2020
Asset Quality                    
Loans 30-89 days past due $24,819  $31,460  $28,188  $36,551  $40,392 
Nonperforming loans  52,826   54,070   67,443   60,513   58,166 
Nonperforming assets  75,004   75,432   84,795   74,707   67,158 
Net charge-offs  1,706   2,328   5,292   3,062   12,835 
Loans 30-89 days past due to total loans  0.51%  0.62%  0.57%  0.76%  0.92%
Nonperforming loans to total loans  1.08%  1.06%  1.36%  1.25%  1.33%
Nonperforming assets to total assets  1.09%  1.10%  1.27%  1.12%  1.08%
Allowance for credit losses to total loans  1.28%  1.18%  1.07%  0.97%  0.88%
Allowance for credit losses to nonperforming loans 118.67%  111.79%  78.25%  77.82%  66.27%
Net charge-offs to average loans  0.14%  0.19%  0.44%  0.26%  1.18%
                     
Wealth Management                    
Trust assets under administration $3,560,427  $3,480,759  $3,260,893  $3,253,784  $2,967,536 
                     
Market Data                    
Book value per share at period end $28.43  $27.83  $27.51  $27.62  $26.99 
Tangible book value per share at period end (1) $19.98  $19.31  $19.03  $18.72  $18.19 
Market price at period end $27.74  $17.87  $12.85  $14.95  $17.49 
Shares outstanding at period end  22,351,740   22,325,471   22,602,844   22,937,296   23,381,496 
                     
Capital                    
Total capital to risk-weighted assets  13.73%  13.24%  13.34%  13.67%  13.73%
Tier 1 capital to risk-weighted assets  9.62%  9.20%  9.40%  9.71%  9.76%
Tier 1 common capital to risk-weighted assets  8.39%  7.99%  8.18%  8.44%  8.47%
Tier 1 leverage ratio  7.79%  7.50%  7.72%  7.75%  8.39%
Tangible common equity to tangible assets (1)  6.67%  6.46%  6.61%  6.67%  7.08%
                     
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.
                     


 
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
                     
Adjusted Earnings Reconciliation                     
                     
  For the Quarter Ended 
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands, except per share data) 2021 2020 2020 2020 2020
Income before income taxes - GAAP $24,040  $10,746  $3,270  $15,993  $2,005 
Adjustments to noninterest income:                    
Gain on sales of investment securities, net -   -   1,721   -   - 
Other  75   3   (17)  11   (13)
 Total adjustments to noninterest income  75   3   1,704   11   (13)
Adjustments to noninterest expense:                    
Loss on mortgage servicing rights held for sale  -   617   188   391   496 
Loss on repurchase of subordinated debt  -   -   -   -   193 
Impairment related to facilities optimization  -   (10)  12,651   60   146 
FHLB advances prepayment fees  8   4,872   -   -   - 
Integration and acquisition expenses  238   231   1,200   (6)  886 
 Total adjustments to noninterest expense  246   5,710   14,039   445   1,721 
Adjusted earnings pre tax 24,211   16,453   15,605   16,427   3,739 
Adjusted earnings tax  5,549   3,982   3,582   3,543   933 
Adjusted earnings - non-GAAP $18,662  $12,471  $12,023  $12,884  $2,806 
Adjusted diluted earnings per common share $0.82  $0.54  $0.52  $0.55  $0.11 
Adjusted return on average assets  1.12%  0.73%  0.72%  0.78%  0.19%
Adjusted return on average shareholders' equity  12.12%  7.97%  7.56%  8.20%  1.73%
Adjusted return on average tangible common equity  17.39%  11.50%  11.04%  12.14%  2.53%
                     
                     
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation                     
                     
  For the Quarter Ended
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands) 2021 2020 2020 2020 2020
Adjusted earnings pre tax - non-GAAP $24,211  $16,453  $15,605  $16,427  $3,739 
Provision for credit losses  3,565   10,058   11,728   10,997   11,578 
Impairment on commercial mortgage servicing rights  1,275   2,344   1,418   107   8,468 
Adjusted pre-tax, pre-provision earnings - non-GAAP $29,051  $28,855  $28,751  $27,531  $23,785 
Adjusted pre-tax, pre-provision return on average assets  1.75%  1.69%  1.72%  1.68%  1.58%
                     


                
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
                
                
Efficiency Ratio Reconciliation               
  For the Quarter Ended
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands) 2021 2020 2020 2020 2020
Noninterest expense - GAAP $39,079  $47,048  $53,901  $41,395  $41,666 
Loss on mortgage servicing rights held for sale  -   (617)  (188)  (391)  (496)
Loss on repurchase of subordinated debt  -   -   -   -   (193)
Impairment related to facilities optimization  -   10   (12,651)  (60)  (146)
FHLB advances prepayment fees  (8)  (4,872)  -   -   - 
Integration and acquisition expenses  (238)  (231)  (1,200)  6   (885)
Adjusted noninterest expense $38,833  $41,338  $39,862  $40,950  $39,946 
                
Net interest income - GAAP $51,868  $53,516  $49,980  $48,989  $46,651 
Effect of tax-exempt income 386   413   430   438   485 
Adjusted net interest income 52,254   53,929   50,410   49,427   47,136 
                
Noninterest income - GAAP  14,816   14,336   18,919   19,396   8,598 
Impairment on commercial mortgage servicing rights  1,275   2,344   1,418   107   8,468 
Gain on sales of investment securities, net -   -   (1,721)  -   - 
Other (75)  (3)  17   (11)  13 
Adjusted noninterest income 16,016   16,677   18,633   19,492   17,079 
                
Adjusted total revenue $68,270  $70,606  $69,043  $68,919  $64,215 
                
Efficiency ratio  56.88%  58.55%  57.74%  59.42%  62.21%
                


                
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
                
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share         
                
  As of
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands, except per share data) 2021 2020 2020 2020 2020
Shareholders' Equity to Tangible Common Equity               
Total shareholders' equity—GAAP $635,467  $621,391  $621,880  $633,589  $631,160 
Adjustments:               
Goodwill  (161,904)  (161,904)  (161,904)  (172,796)  (172,796)
Other intangible assets, net  (26,867)  (28,382)  (29,938)  (31,495)  (33,124)
Tangible common equity $446,696  $431,105  $430,038  $429,298  $425,240 
                
Total Assets to Tangible Assets:               
Total assets—GAAP $6,884,786  $6,868,540  $6,700,045  $6,644,498  $6,208,230 
Adjustments:               
Goodwill  (161,904)  (161,904)  (161,904)  (172,796)  (172,796)
Other intangible assets, net  (26,867)  (28,382)  (29,938)  (31,495)  (33,124)
Tangible assets $6,696,015  $6,678,254  $6,508,203  $6,440,207  $6,002,310 
                
Common Shares Outstanding  22,351,740   22,325,471   22,602,844   22,937,296   23,381,496 
                
Tangible Common Equity to Tangible Assets  6.67%  6.46%  6.61%  6.67%  7.08%
Tangible Book Value Per Share $19.98  $19.31  $19.03  $18.72  $18.19 
                
Return on Average Tangible Common Equity (ROATCE)            
                
  For the Quarter Ended
  March 31, December 31,  September 30,  June 30, March 31,
(dollars in thousands) 2021 2020 2020 2020 2020
Net income available to common shareholders $18,538  $8,333  $86  $12,569  $1,549 
                
Average total shareholders' equity—GAAP $624,661  $622,594  $632,879  $631,964  $652,701 
Adjustments:               
Goodwill  (161,904)  (161,904)  (168,771)  (172,796)  (171,890)
Other intangible assets, net  (27,578)  (29,123)  (30,690)  (32,275)  (33,951)
Average tangible common equity $435,179  $431,567  $433,418  $426,893  $446,860 
ROATCE  17.28%  7.68%  0.08%  11.84%  1.39%